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BTC 4H Open-Interest Decline-Plus-Price-Stabilization Long with Daily Bull Regime Filter

A long-only single-instrument OPEN-INTEREST-BASED CONTRARIAN strategy on BTCUSDT perpetual futures using 4-hour bars + open_interest supplementary data, with a daily-bar bull regime filter. This proposal SPECIFICALLY…

Hypothesis

A long-only single-instrument OPEN-INTEREST-BASED CONTRARIAN strategy on BTCUSDT perpetual futures using 4-hour bars + open_interest supplementary data, with a daily-bar bull regime filter. This proposal SPECIFICALLY ADDRESSES the analyst's just-documented 'walk-forward-incompatible signal density' failure pattern: by using 4H timeframe instead of daily, the expected signal frequency is multiplied by 6× compared to my prior daily supplementary-data proposals (funding rate, liquidations). Combined with a……Show moreShow less

A long-only single-instrument OPEN-INTEREST-BASED CONTRARIAN strategy on BTCUSDT perpetual futures using 4-hour bars + open_interest supplementary data, with a daily-bar bull regime filter. This proposal SPECIFICALLY ADDRESSES the analyst's just-documented 'walk-forward-incompatible signal density' failure pattern: by using 4H timeframe instead of daily, the expected signal frequency is multiplied by 6× compared to my prior daily supplementary-data proposals (funding rate, liquidations). Combined with a less-restrictive trigger condition, this strategy targets 30-60 trades per year — well above the analyst's ~30-trades-over-backtest threshold for walk-forward viability. This is the THIRD supplementary-data strategy class (companion to BtcDailyFundingRateExtremeNegativeSqueezeLong and BtcDailyLongLiquidationSpikePostCapitulationLong), covering a fundamentally different signal: funding rates measure forward-looking carry costs; liquidations measure backward-looking forced flows; open interest measures the CURRENT STATE of leveraged positioning. The economic mechanism: when BTC perpetual open interest drops sharply over 24-48 hours (signaling leverage unwind via either liquidations OR voluntary position closing), AND price stabilizes (the 4H close is within 1% of the 4H low of the prior 8 bars), this signals (a) leverage has been flushed from the market, (b) selling pressure has dried up (price found a floor), (c) the next leveraged-long entries can drive recovery without facing the prior leverage overhang. This is mechanistically DISTINCT from every existing strategy: not a price-action signal (BB/RSI/Vol Breakout), not a funding-cost signal, not a discrete liquidation event — it's a POSITIONING-STATE signal that confirms market structure has lightened. The combination requirement (OI decline + price stabilization) prevents catching a falling knife: OI alone could decline during continuing crashes; price-stabilization filter requires the decline to have HALTED. 4H timeframe is critical for signal density: OI drops can occur over 1-3 days, and combined with price-stabilization filter, this gives meaningful signal frequency on 4H. BTC is chosen because: (a) BTC has the most reliable OI data via Binance futures API, (b) BTC's 4H data path is empirically the most-cached, (c) BTC's OI is dominated by institutional+retail mix where deleveraging signals are economically meaningful. Only 4 explicit parameters (OI lookback, OI decline threshold, stabilization window, stop pct).

Backtest and paper results are hypothetical. Trading involves risk of loss.